06: The 7 P’s for Crowdfunding Success

Zach Smith: (00:00) Have you ever wondered if there was a “Secret to Virtually Guaranteeing Crowdfunding Success” we kind of think there is, and it’s called the “7-P’s for Crowdfunding Success” these “7-P’s” are “Product” “Platform”, “Presentation”, “Promotion”, “Price”, “Probability” and “People”. We’re going to give examples of each and show you how you can make sure you’re not overlooking even one of these “P’s” because if you miss even one your chances for Crowdfunding Success diminish drastically.

Announcer: (00:28) The Funded Today Podcast is hosted by World-Renowned Entrepreneurs and Business Experts Thomas Alvord and Zach Smith, to get a help with your next big business idea or to take your business to the next level, go to fundedtoday.com.

Zach Smith: (00:42) Welcome back I’m Zach Smith.

Thomas Alvord: (00:44) And, I’m Thomas Alvord.

Zach Smith: (00:46) You might recall in our last episode we talked about the “Crowdfunding Success Matrix” so if you missed that one go check it out we pretty much distill down the essence of Crowdfunding to Product and Marketing, very interesting and I think it will help you to make sense of some things that are a little bit confusing. In today’s episode we want to talk about the “7 P’s” for Crowdfunding Success. These are “7-P’s” that over the last four years Thomas and I have created based upon the $200 million that we’ve raised that we think is the essence of Crowdfunding.

Thomas Alvord: (01:17) When you use these “7-P’s” to be able to analyze any campaign, if a campaign is succeeding usually they have all these “7-P’s” lined up and if it’s failing literally just tweaking one of these “7-P’s”could be the difference of success or failure. And so really it’s another tool in your tool belt to be able to analyze a campaign look at a campaign and say hey what do we do here? How do we improve what’s working what’s not?

Zach Smith: (01:46) Alright so let’s just dive right in “P” Number 1 is “Product”. Now you need to ask yourself some questions as you go about developing or inventing a product. How do you do that? Here is a bunch of questions I’d like you to start considering. Number one, why is your product different, special or unique? What’s your story, how do you pair that story with the pain point you solved as you created your product? And what’s your why, how do you get people excited about this? How do you create a tribe of excited people that are going to get behind your new product? Why are you doing what you’re doing? Question number two we’ll call it is there something about your product? Some benefit that makes it wholly special and one of my favorite questions that we started developing because we see so many Crowdfunding products on Kickstarter an Indiegogo would you personally buy your product? Will your family and friends actually give you cash in advance for it that’s the whole “Triple F” that we talked about in an earlier podcast episode How about your Facebook and LinkedIn contacts? Another question is your product innovative? Thomas and I always talk about “techie” or “cool” the idea of making something ordinary “techie” or “cool” we’ll talk about that a little bit later on, is it more niche or more ubiquitous? How dialed in are you with your product and then finally will a lot of people need or want your product and/or its benefits? We think if you start by asking these questions you’re going to create a product that resonates with the masses, and that’s product.

Now let’s talk a little bit more about product in terms of story. One of my favorite examples is - two client’s actually “Ryan Krantz” and “Boman Farrer” these guys had invented a watch, but I want to talk about the story really quick because the story is what makes it so cool, it's called “Luno Wear” and ready for the ad copy you don’t even need to see the ad, you don’t even need to see anything about this watch to see why this worked so well. This 73-year old watchmaker launched a Kickstarter to pass-on his legacy of watchmaking to his grandchildren, his newest watch is awesome you have to see this. No wonder these watches are so popular that’s kind of what created the curiosity, and if you could see the ad the ad didn’t even show the watch to start that was the job of the “Presentation” it was this story that resonated with people, and it resonated to the tune of raising $50,000 bucks or more a day at many times, that’s the power of a good story that pairs and synchronizes well with your product.

Thomas Alvord: (04:26) And when we look at a campaign that we’re working on and it's not performing we are going through these “P’s” and we’re saying is it a price issue? Is it a promotion issue which is a marketing issue? Is it a platform it’s just not the right - Kickstarter is not the right platform or is it a product issue and really the product is do people want this, if you have a product that people actually want and it is not converting then it’s going to be one of the other “P’s” but if you have all of your other “P’s” set up and the right and people still aren’t buying you probably have a product issue. You actually have a product but that there is not a market or there’s not demand for it, and really that’s what we’re looking at in the product is there demand for this, is there a market for this, and if so you should be selling and it's probably one of the other “P’s”.

So the next “P” that we look at is “Platform” and Platform is just like it sounds, is your product a good fit for the Kickstarter and Indiegogo Platform there is different platforms you can launch on obviously you have the Internet, e-Commerce your own website you could do retail, you could try to get into Costco or to Walmart or some other retail place, you could do Amazon, you could do Etsy, you could EBay.

Zach Smith: (05:57) You could do door-to-door.

Thomas Alvord: (05:58) You could do Kickstarter or Indiegogo and there’s also Equity Crowdfunding Platforms where you could do equity raises, so there is a lot of platforms where you could potentially launch your new venture.

Zach Smith: (06:09) A lot of people ask well which product is good for Kickstarter or which product is good for Indiegogo or is my product even good for Crowdfunding that’s where platform comes into play, and I use a really easy example let’s say you own a lawn care company, or a pest control company, or a fertilization company if you would launch those particular products on Crowdfunding you’ve got a very high chance of failing unless you can really rock-out the “Triple F”. However, if you employ a sales force and you have them knocking doors you have a good chance of getting a lot of clients, that’s the difference in platform. Kickstarter is great for products, it’s good for e-commerce related types of things, Kickstarter is not so good for apps they try to do good for films and other sorts of things they’re not so great for that either, Kickstarter is good for board games it’s a new niche it’s popping up quite a bit, anything in that space.

When I say Kickstarter I mean Indiegogo as well now there is something that I get asked a bunch when we get into platform specifically and it’s well should I go on Kickstarter or should I go on Indiegogo, and the answer is very, very simple, you should always go on Kickstarter unless Kickstarter doesn’t accept your product, you get turned down then you can go to Indiegogo or Indiegogo is going to bend over backwards to help you, because Kickstarter the probability of being able to raise more money on Kickstarter is about triple nowadays compared to what you will raise on Indiegogo. So I go to Kickstarter with the exact same idea, exact same story, exact same product and I raise a $100,000 I might only raise $33,000 on Indiegogo.

Now the good part is Indiegogo has a pretty awesome feature called Indiegogo InDemand after to your campaign is over you can use their Indiegogo InDemand Platform to continue to raise money for your product, and that’s platform in a nutshell.

Thomas Alvord: (07:57) And, if you launch on Kickstarter or Indiegogo and your campaign isn’t successful, it doesn’t mean you necessarily have a bad product it could be but that’s the case. It could be it’s just not the right platform for example if you manufacture and sell drinking straws and you launch it on Kickstarter yes it's a physical product but it’s not really techie or innovative it’s probably not a good fit, however, if you go and sell an Amazon yes with the right marketing you probably can do $10,000 to $20,000 in sales a month so again is it a platform issue.

Zach Smith: (08:34) Again, you’re always asking yourself as we approach these “P’s” questions is it a platform issue, is it a product issue which brings us to the next P and this is the “P” Number three one of our favorites “Presentation” Thomas, also a short story of Aaron and ShotBox 2.0.

Thomas Alvord: (08:52) About two years ago there was a client who came to us we were running their marketing and it wasn’t converting they hadn’t hit their goal I believe they had a goal of $20,000 or so, they had only raised $12,000 around there they weren’t going to hit their goal and the product was called “ShotBox 2.0”, A ShotBox was a product where it’s kind of a container that you could put a memorabilia or product anything in it and there’s a little space at the top that you’d be able to put your phone camera to shoot down and you’d be able to get these really high quality pictures or even like a scanned document it would almost look like if you had a document you were taking a picture of and it had a really good lighting so it’s called ShotBox and basically what happened was he wasn’t going to hit his goal, and I was looking at the campaign because our marketing wasn’t converting right the Promotion the “P” for promotion our marketing it was it was fine the Product was good, the Platform was good but the Presentation was not good.

Now at the time we didn’t realize it but we were analyzing to see hey what’s the issue here, and what we found was something really interesting is he was doing a Version 2.0 of his product that’s why it’s called “ShotBox 2.0” so his first product was “The ShotBox” the case that you would take the pictures in the 2.0 was only sleeves or backgrounds that would work with the ShotBox Well here’s the problem with that he was selling these backgrounds to work with his ShotBox which basically made it so his universe of potential customers were ShotBox owners right it was too small and somebody could make a pledge on the Kickstarter page to get an actual ShotBox but the video itself was not explaining his original product it assumed people knew what his original product was. So really the issue was he needed to change how he was presenting his product and the reason I saw this is because I saw that he had a previous campaign on Kickstarter called ShotBox his original one that had raised over $100,000 I believe and now he hadn’t raised $12,000.

Zach Smith: (11:30) We’ll put these links up in the show notes as well so you can compare.

Thomas Alvord: (11:35) What we did is he hired us to redo his video and we reshot his video making sure we focused on explaining the benefits and explaining what the ShotBox was to begin with as well as having the sleeves or the backgrounds, and then with that presentation literally was just changing his video making it so the copy and the description and the benefits people understood and then he raised how much was it Zack a 100,000 plus?

Zach Smith: (12:09) $185,000 bucks and he is over $200,000 the story is remarkable because this is a campaign that had failed. It raised $8,000 bucks wasn’t going to hit its goal and then literally in what two or three weeks turnaround redid the video, redid the page restructured the rewards, all presentation elements mind you and we raised $184,791 bucks continued to raise thousands more on Indiegogo InDemand and then because of the success he got a QVC or HSN Feature that raised hundreds of thousands of dollars more for ShotBox 2.0, and here is something that we took away from all of this, we’re going to talk about Promotion next that’s “P” Number Four but with Presentation we found through ShotBox 2.0 the presentation is actually more powerful than promotion why? Because we did the exact same promotion for ShotBox 2.0 that we did the first time around promotion didn’t work the first time around it absolutely crushed it the second time around, therefore presentation trumps promotion.

Zach Smith: (13:07) And really in a way this goes back to what we spoke about on our last podcast “The Crowdfunding Success Matrix” the Promotion is the marketing element. How well do you market it and in a way everything else is a factor that influences what’s the conversion rate, what’s the earnings per visitor, and so the promotion is how good is your marketing if you have a product that’s converting like crazy but just don’t have enough traffic well then you have a promotion issue, but if you’re promoting it well you have influencers lined up, you’re running paid media, you’ve landed press and nothing’s converting then really it’s going to be one of these other “P’s”.

Thomas Alvord: (13:54) So let’s talk about “P” Number Four Promotion this is kind of the “P” that gave Funded Today the world famous reputation it’s the sizzle it’s what everybody wants to know how do I get more eyeballs on my page “Promotion”. We have dialed it down to several different elements and I’m just going to kind of shout him off real quick and then we can speak to them a little bit more specifically. Promotion comes down to anything you can do legally, ethically, totally in line with Kickstarter’s and Indiegogo’s tons of service of course to bring traffic it converts to pledges to your page that’s Promotion. And promotion on Funded Today’s end consists of paid media at your Facebook, your Instagram, your Pinterest your earned media outreach that’s getting USA Today to write about you “Tech Crunch”, “Gizmodo”, “Mashable” maybe “The New York Times” any sort of press you can possibly get about your product that’s the earned media outreach side of things. Cross collaborations, cross collaborations are basically finding people who have similar ideas let’s do ShotBox as an example let’s say ShotBox was two different people and ShotBox had his panels and then there was another guy ShotBox running the actual ShotBox, so ShotBox could go to the panel guy and say hey tell all your panel guys about the ShotBox and in exchange for you telling all of your ShotBox guys about these panels I’ll tell my panel guys about your ShotBox that’s a cross collaboration, you scratch my back I’ll scratch yours, the best part is on Kickstarter and Indiegogo there are thousands upon thousands of products that might be similar to your own but slightly different enough so that won’t necessarily create competition you can reach out to them and ask them to promote your product and in turn you can promote their product that’s cross collaborations across promotions. And then finally cashback, cashback as a way to incentivize people to purchase we came up with the idea that if you are a Crowdfunding backer and you love backing Crowdfunding products why don’t we just give you a discount for purchasing and that’s what we do anybody who’s part of the cashback network can get 10% cashback from any product in our marketplace, and so if you’re a serial crowdfunding backer you always go to the Funded Today cashback network because you can get 10% off backing the same products you’re going to back anyway it just seemed like a no brainer for us and we’ve grown that network to hundreds of thousands of people now and we raise hundreds of thousands of dollars a month through that means of promotion, and all of these items along with anything else that we think of as the years go on factor into the “P” Number Four of Promotion.

Thomas Alvord: (16:32) Now the fifth “P” is Price what’s your price-point how much are you selling it for? Price makes a substantial difference, price will influence your conversion rate and how many people back your campaign. One of the reasons you launch on Kickstarter is because of the organic traffic the love basically that you get from Kickstarter because you have all these other people browsing on Kickstarter right it’s the same idea by people who put their product on Amazon, it’s because you’re part of a marketplace and you’re getting a lot more eyeballs than you otherwise would get if you were just on your own webpage. The price not only impacts what your margin is and what your profit is? What your gross revenue is? Your conversion rate and how many units you’re going to need to go produce but it’s also going to affect your ranking on Kickstarter, Kickstarter has an algorithm that will determine how popular your campaign is and where should it rank in the searches, having a lower price-point actually helps you boost your organic ranking so you can generate more pledges.

Zach Smith: (17:43) Ready for a Kickstarter super tip, if you had a thousand people pledge just $1 for your campaign that would only be a $1,000 total and  pledges you have a thousand backers versus if you had ten people pledge $100 again a thousand total dollars in pledges, but only ten backers your product would rank substantially higher on Kickstarter probably the number one ranking most the time having a thousand backers at $1 versus ten backers at $100 dollars that’s a little inside trick that a lot of people don’t know about how the Kickstarter ranking algorithm for trending and popular works.

Thomas Alvord: (18:17) And so if you have a campaign and it’s converting or not converting you’ve got to look at the price. There was a campaign we worked with it was interesting it’s called “BetterBack” this was Katherine Krug’s first campaign we had a price point of $49 with her margins on marketing she thought hey I’ll increase the price the $75 right. Hey $50, $75 doesn’t seem like that big of a difference we tested it her sales plummeted drastically, and that was because of the organic and because of our paid media it wasn’t converting us high. So price does matter and a lot of people on Kickstarter are in a sense there to get an early bird or to get a discount because they know that you know this is where innovators come, this is where people come to launch their campaign and that because you’re one of the first backers or the first people to support this project they’re going to get a discounted rate compared to when it goes to retail right, and so there is some risk involved so if you’re selling something somebody could go by at Walmart or on Amazon or somewhere else and it's the same price it’s usually not going to work as well.

Zach Smith: (19:36) Nowadays everybody is tech savvy they are going to look for a similar product they’re going to pull out their smartphone are going to go on Amazon and they’re going to see if something like this already exists or something similar and if it’s cheaper on Amazon and they can get it with two day Prime Shipping they’re not going to buy your product. I love the story of Katherine Krug because she was very creative there wasn’t really anything else like this out there at the time and she did what Thomas just described, she had an early bird level and she anchored that early bird level at $49 bucks, $50 bucks we’ll call it she called “Early Backs” it was a posture device that helps you to sit at a good posture while you were working at your desk.

She called the first level “Early Backs” and it was about a $50 price-point and then she had something called “Kickstarter Backs” and that was a $75 price-point and then she had a third level called Estimated Retail Value $99 we call this anchoring your pledges. So she actually had all those pledges on her Kickstarter campaign pledge $49 or more get yourself an Early Back, pledge $75 or more get yourself the same product by doing that everybody said “Oh! Wow I better hurry and back this product right now because if I don’t back this product right now I’m going to pay $75”. One more thing about price and Thomas hinted on this a little bit earlier already we turned off the $49 price point and we only had the $75 anchored against the estimated retail value of $99, and when we did that we found that things didn’t convert. One tip about price that we always get asked is what should I price my product at and I think the answer is simple you should price your product as high as possible to start because you can always come down, but if you start out pricing your product low it’s hard to come-up because everybody that’s already backed at a lower price point is going to ask well that doesn’t make sense why would I pay more.

Thomas Alvord: (21:30) The Sixth “P” is “Probability” and really that’s simply asking what’s the probability that what you’re creating is going to come to fruition what’s the probability that you’re actually going to be able to create this because if it’s not probable if there’s not that likelihood then people might be more hesitant to back your campaign you could have the most amazing product that you launch on Kickstarter, but with Kickstarter the products are usually not already created they can be but often they’re not and people understand that and so if people perceive that there could be that risk then yes you could actually be in a place where you’re not getting any backers just because they don’t think you’re going to be able to pull it off.

Zach Smith: (22:18) I think probability comes down to two elements and we talk about him a little bit. There’s a substance of our “7-P’s” and then there’s the perception of each of the “7-P’s” so you can have a “Presentation P” that conveys your product as $100 bucks in value but then you can change that Presentation P and the perception of your whole product will change. So even though your product is not changing physically when you present it differently your “Product P” will change in the minds of your prospective customers or backers. There’s a good product called the “Onsen Towel” it basically used a waffle weave type of knitting pattern to make it so that the towel would not stink. So it’s just a towel right, just a towel that you’d take a shower or bath with and dry yourself off when you’re done, but the product had some intrinsic value perceived that people thought they could not get anywhere else and this towel raised about over a $1 million when all was said and done that’s your probability, and sometimes it does come down to timing as well it’s not always are you building the better mousetrap it’s are you building the mousetrap that people want right now, and I believe this affects your probability of success that’s “Probability P Number Six, and finally our last “P” is People.

Thomas Alvord: (23:34) You know I will share I’m going to deviate here and I don’t even know how I shared this with you but it’s interesting one of the “Real Estate Syndications” that I invested some money in he actually has a podcast and a blog and he teaches people how to put together these deals right these Real Estate Syndication he says I’m going to let you in on a secret, if you’re trying to raise capital in terms of crowdfunding that’s what you do when you’re raising capital right, but in his case right he’s raising $10 million in private capital to go buy $30 million multi-family unit. He said it’s not the property it’s not the financials it’s not the location it’s you the sponsor as a person. Do people trust you because so often we think that it’s all these other things but very often it’s actually do people trust us, do people trust you as the creator.

Usually with E-commerce if you go to buy some product online you’re not seeing the face of the creator you’re not seen who they are who the team is maybe there’s an “About Page” where you can kind of see that but it’s not really relevant. With crowdfunding 98% of the time it’s frontend center because you have a Kickstarter video or an Indiegogo video and you’re saying here’s who I am, here’s what I’m creating, here’s why you should trust me let’s make this a reality together. And one of the best examples that always sticks in my mind is the crowdfunding campaign called “Ukulele” which was a couple years back out of the UK they raised I believe over $2 million, the creators of “Ukulele” were some of the people who used to work on the video game “Donkey Kong” right? So right out of the gate it doesn’t even really matter what they say or don’t say you’re like oh are you kidding I grew up playing “Donkey Kong” these are the guys that used to work on that on “Donkey Kong” and they’re creating this new game dude 100% I’m in it’s going to be amazing if you have expertise in what you’re doing or experience you want to display that and show people that look what I’m creating here is actually going to be something amazing and substantial because of who you are and you don’t have to say in those words but if you share your background, and you share your expertise people will draw the connection that people element of the “7 P’s” can have a substantial impact on your campaign.

Zach Smith: (26:23) I really love that Thomas I think you’ve hit the nail right on the head, I actually had an experience just a couple days ago I was doing some freelance consulting for free actually for a product on Kickstarter right now it’s actually was for a film looking to get brought to life and the campaign had done pretty good right off the back this guy and had a successful campaign before he’s making a movie called “Reign of Judges” and it’s about a story in “The Book of Mormon” and he’s raised six figures for it so far which is pretty impressive because most short films don’t raise very much money on Kickstarter if any money at all, so he is already in the top 1%. He’d reached the typical plateau in the middle of his campaign where he had raised any money and I went watched all of his content, watched all his videos and this is a guy who conveys the KLT that Thomas just talked about “Know, Like and Trust” KLT right? Every time he made a video he gets like a spike and pledges like crazy and then he made this most passionate intense video where he’s in there, he’s almost crying a few times he’s talking about all the different things he’s done, he’s laying his life on the line he’s talking about how he hasn’t done anything else for years it’s so passionate it’s so compelling that you watch it and you’re convinced that this guy is going to make it happen, because in Crowdfunding there is a chance that what you’re backing doesn’t come to life and this guy’s plea - this guy’s cry is kind of like the “Reign of Judges” title of liberty that he’s referencing.

The title Liberty about a guy in “The Book of Mormon” who rallies an entire civilization of people to a cause of freedom, and that’s what this guy did for his campaign it was beautiful and guess what happened the next day he raised four to five times more than his average raise after he releases passion of video, and for me I think that hit home on the People side of “P” whereas it can really trump every one of the other elements if you get the People element right, if people know you that they like you if they think they can trust you if they know that you’re going to bring his product to life and that you’re devoting yourself to making it happen I think you’re going to resonate more with your backers and that’s “P” Number Seven People. So let’s sum things up we’ve got “7-P’s” “Product, Platform Presentation, Promotion, Price, Probability and People” and all of these “7-P’s” matter if you’re underutilizing even one of these “P’s” your chances for success diminish drastically.

Thomas Alvord: (28:51) Now on to the product of the week, for myself the product of the week has to be the “Spyra One” it’s the next generation of water guns. It has built-in battery when you shoot it, it kind of shoots like bullets you’re able to fill it up I believe it’s only 14 seconds that you can do auto quick refill you basically have constant pressure you never have to pump it up and it has a digital display that shows you how much water you have in the tank and how much battery you have it’s a super cool water gun you should definitely check it out.

Zach Smith: (29:25) And my product of the week is the “Soul Solar Scroll” I just had a chance this last year to go to “Mt. Everest Basecamp” and “Kala Pattar” which is just over 18,000 feet altitude. If you’ve ever carried around solar panels to try to charge you devices of you can take some pictures at a place where it is pretty desolate this product would have come in handy I was always fumbling with my solar panels moving around in my backpack trying to get them to it the sun right it was bulky it was uncomfortable I was always afraid that I was going to break them, Solar Scroll fixes this problem in my opinion, it’s a portable solar charger that works just like a scroll picture where most scrolls that you pullout back in pirate times and it looks like a map and then it can snap back into a little case that’s what the Solar Scroll is and the Scroll Part is a solar panel and the solar panel charges you can snap it right back and put it right in, it’s pretty amazing, pretty cool and it provides limitless outdoor charging for your outdoor adventures. Check it out it’s the “SOUL Solar Scroll” it’s ending soon on Kickstarter but you’ll probably be able to catch it on Indiegogo InDemand on Ecommerce shortly.

Thank you so much for tuning in this week be sure to tune into our next Masterclass this one is going to be really special it’s kind of personal to me, we’re bringing on our Director of Page Design at Funded Today Luke Morris he’s going to be going over the “Presentation “P” as it relates to structuring your rewards, designing your page he’s had a lot of experience he’s raised millions of dollars for lots of campaigns he’s going to basically reveal everything he does, what he looks at how he goes about it how to design a beautiful amazing page that converts. You’re not going to want to miss it that’s next time on the Funded Today podcast and remember don’t wait until tomorrow get Funded Today.

Announcer: (31:21) Funded Today is the Worldwide leader in Rewards Based Crowdfunding on Kickstarter and Indiegogo, combined to they have raised over $200 million dollars and counting for thousands of new ideas and innovations worldwide, if you’ve got an idea for a new product or invention visit fundedtoday.com to speak with one of their experts.